Strategic Management Analysis Report: British Airways Performance

This report provides a comprehensive strategic management analysis of British Airways. It begins with an executive summary outlining the report's objectives, which include assessing British Airways' market position and competitive strategies. The report delves into strategic planning, emphasizing its benefits and the role of environmental analysis. It examines both macro (PESTLE) and micro (Porter's Five Forces) environmental factors impacting British Airways. The analysis further includes an evaluation of findings from a SWOT analysis, identifying the airline's strengths, weaknesses, opportunities, and threats. Finally, the report offers strategic recommendations aimed at ensuring the airline's sustainability and enhancing its competitive advantage within the dynamic airline industry. The analysis considers various factors such as BREXIT, technological disruptions, and economic impacts to provide a holistic view of the airline's strategic landscape.

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Executive Summary
This report had depicted the role of strategic management in organizational success. The
organization chosen for the report is British Airways which is the major market players in the
United Kingdom. The report had identified whether British Airways are the market leader,
follower or a niche player. Therefore, the chosen organization had been analyzed which included
situational analysis (macro and micro environment) and competitive strategy of British Airways.
The report had critically analyzed the benefits of using strategic planning and role of
environmental analysis in strategic planning process. Thus, the report had identified the current
strategic issues faced by the organization by using suitable model such as PESTLE, Porter’s five
forces, and SWOT analysis and recommend suitable strategy essential for maintaining their
sustainability and gaining competitive advantage.

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Table of Contents
Introduction......................................................................................................................................3
Section 1..........................................................................................................................................4
1. 0 Strategic planning in British Airways and its benefits.........................................................4
1.1 Role of environmental analysis in strategic planning process...............................................5
1.2 Environmental analysis..........................................................................................................7
1.2.1 Macro environment Analysis..........................................................................................7
1.2.2 Micro environment analysis...........................................................................................9
Section 2........................................................................................................................................13
2.0 Evaluation report of findings in SWOT...............................................................................13
Section 3........................................................................................................................................14
3.0 Recommendations................................................................................................................14
4.0 Conclusion...............................................................................................................................14
5.0 References................................................................................................................................15

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Introduction
British Airways PLC has been formed by merging British European Airways and British
Overseas Airways Corporation in the year of 1974 (Britishairways.com 2018). The company was
owned by state by the end of 1987 it had become privatized. British Airways had remained one
of the largest carriers all over the world. The organization had been the largest carrier of
passengers till the year of 2008 but it was displaced by one of their rivals EasyJet. The U.S.
Department of Justice fined British Airways of $300 for price fixing. The organization had been
facing financial crisis in 2008 which led to develop a merger with Iberia Airlines which is one of
the Spanish giants. However, the agreement was formed based on the conditions that both the
companies will keep their separate brand names. British Airways merged with Iberia Airlines in
the year of 2011 to developing a new holding company named International Airlines Group
(Britishairways.com 2018). This had helped the organization to save them from being bankrupt
and the organization has been able to maintain their sustainability in the market. However,
recently the British Airways fleet had been grounded for more than 2 days due to failure in
information technology system. Therefore, the organization will have to develop strategies for
increasing their efficiency of their business model.

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Section 1
1. 0 Strategic planning in British Airways and its benefits
As stated by Bryson (2018), strategic planning is an essential component of strategic
management and had been used for better management of organizations. The increase in
competition in market has increased the level of importance of strategic planning where the
success and failure of the organization is dependent on it. Strategic planning has a crucial role to
play in the organization. Strategic planning is the driver of all other plans within the organization
and all the short term plans are developed based on the long term strategic planning. On the
hand, Ginter, Duncan and Swayne (2018) stated that exploration and identification of new
market opportunities is known as strategic planning. Therefore, the organization will be able to
maintain the objectivity of the activities. Strategic planning will consist of analysis of the macro,
micro and internal environment of the respective organization. There are both financial and non
benefits attached to strategic planning as it provides opportunities for evaluating the
shortcomings and the opportunities.
In case of British Airways, it is essential to continuously evaluate the market and the
competitors due to the fast changing nature of the business and the needs of the clients. British
Airways needs a proper strategic direction for gaining competitive advantage over the major
players in the market. Strategic planning will make the organization aware of the surrounding
environment so they will have the option being proactive and reactive depending upon the
situation. It is impossible for the company to predict al the uncertainties in the market but
strategic planning will provide better adaptability and flexibility (Bryson, Edwards and Van
Slyke 2017). Strategic planning will provide better direction to British Airways as the

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organization will be able to develop realistic objectives and goals that will be consistent with the
mission of the firm. BREXIT has impacted the business of British Airways as it reduces the
disposable income of the consumers and also the cheap flights such as Wow Air is causing issues
for the company as they are strongly increasing their consumer base in the country. These issues
can be identified and easily evaluated using the macro and micro environment model, which
gives British Airways the opportunity to develop flexible strategies for improving market
position.
Moreover, it makes it easy for the company to measure their own progress and limitations
of their decision making. Strategic planning will enable British Airways to make decisions that
are wise and effective as strategic planning will provide a clear structure and purpose of the
ideas. Therefore, the organization will increase their sustainability in the market and increase
their profitability. Effective use of strategic planning will unveil the market conditions, service
offerings and customer segments. The use of strategic planning tools will provide British
Airways with the clear view of the market competition and the strategies they may use to
penetrate further into the market. Strategic planning provides deep insights of the internal
environment of the organization so they will be able to manage their workforce in effective way
and increase the productivity of the firm. Strategic planning will throw light on strategies that are
specific to organizational success.
1.1 Role of environmental analysis in strategic planning process
According to Grant (2016), environmental analysis is a key component of strategic
planning and provides a wide overview of the current situation of the organization.
Environmental analysis consists of evaluation of the macro, micro and the internal environmental
of the firm. The macro environment analysis will evaluate the external environment of the

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organization and will include of PESTEL analysis. The micro environmental analysis examines
the internal environment of the organization and includes different models such as porter’s five
forces, value chain and Mckinsey's 7s. The internal environment analysis consists of SWOT
which evaluates the strengths, weaknesses, opportunities and threats.
As opined by Fraj, Matute and Melero (2015), environmental analysis provides the
organization with the trends, opportunities, challenges, positive and negative issues. This assists
in developing effective strategic plan for the future. Strategic planning is one of the fundamental
functions in strategic management. It is necessary for a firm to anticipate the problems the
organization may face in the future and be prepared for any kind uncertainty in the future.
Therefore, environmental analysis is a key in developing the implementation plan and strategic
plan. Environmental analysis consist of examining different aspects such as economical, social,
technological, legal, political which provides an in depth knowledge about the operating
environment.
The financial analysis of the company can facilitate in identify issues in different
strategic levels which is essential for identifying the strengths and weaknesses of the
organization. Environmental analysis will also include competitor analysis where the different
competitors will be evaluated (Wolf and Floyd 2017). In order to develop an effective strategic
plan, the organization will have to be aware of the capability of their rivals along with their own
capabilities. This is essential as the firm will be able to identify counter measures that they can
take against other rivals companies strategies and similarly identify the counter measures that
other companies can take against their strategies. Therefore, developing an effective strategic
planning strategy planning is essential for gaining competitive advantage in the market.

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1.2 Environmental analysis
1.2.1 Macro environment Analysis
PESTLE
Pestle analysis will evaluate the industry scenario of the British Airways in United
Kingdom. This will consist of evaluating the political, economic, social, technological,
ecological and legal environment.
PESTLE ANALYSIS OF BRITISH AIRWAYS
Political The airline industry is subjected to various regulations. These regulations are
based on the different routes taken by the organization. In the present scenario,
British Airways have been operating in political environment that is
challenging. The world has faced terrorist attacks in the past few years which
have reduced the number of travelers significantly. Moreover, BREXIT has
caused political instability for the organization (Nugent 2017). BREXIT has
hampered the relationship with the neighboring along with members of EU.
This will lead to weakening on the home currency in respect to the foreign
currency which could be a huge problem for British Airways. This means that
people will travel less often and the number of the frequent flyers will
decrease. However, development of a new runway in the Heathrow Airport
will have a positive impact on the operation of British Airways. Even though
BREXIT will have a negative impact, there is a positive aspect to it. British
Airways will be able to more direct flights to United Kingdom and other

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destinations.
Economic The economic impact of BREXIT will be huge on British Airways. The
annual report of British Airways in the fiscal year of 2016 shows that
depreciation in pound and sterling more revenue has been generated but the
overall impact on the financial result of the organization is negative due to the
negative impact of exchange (Cesa-Bianchi, Thwaites and Vicondoa 2016).
Similarly, British Airways profited due to decrease in interest rates and fuel
cost which has increased the growth rate in competition and market capacity.
Social The organization faced operational difficulty due to the airline traffic
controller attack in France. France was hit by ATC union which caused
cancellation of flights to and over France. This social unrest has hit the
organization time after time; the same incident affected the organization due to
similar strikes in the fiscal year of 2017 (Muldrew 2016).
Technological There has been relative stability in the airline industry but current market
trends shows that there is digital disruption. These have changed the cost
structure of the industry significantly. The new firms using digital technology
are causing issue for well established organization (Mokyr, Vickers and
Ziebarth 2015). These consist of technologies such as advanced fuel efficient
fleets and internet booking system. Thus, these new competitors (WOW Air) in
the market are able to provide the consumers with international and domestic
flights at cheaper rates. British Airways have been working their way to
reduce the impact of digital disruption by investing technological equipments
that may reduce the gap significantly in the upcoming years.

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Legal The organization had been planning to introduce paid-for-meals but was forced
to delay due to threats from consumers seeking legal actions (Österle 2017).
The organization had to delay it because of many claims of advanced bookings
from different customers.
Environmental The weather conditions have a deep impact on the operation of the
organization as adverse conditions leads to the delay of flights. On, the other
hand. The organization had to maintain the regulatory laws of environmental
protection and safety. The harmful emission of greenhouse gases and other
environmental factors will have to be monitored. Therefore, developing
sustainable practice according to the requirement of the regulatory body is
essential.
Table 1: PESTLE ANAlYSIS
1.2.2 Micro environment analysis
Porter’s Five Forces
Porter’s five forces analyze the internal factors affecting the organization which could be
mitigated and applies only to the organization.
PORTER’S FIVE FORCES OF BRITISH AIRWAYS
Bargaining
power of the
buyer
The bargaining power of the consumers is high in the market. There is high
level of competition in the industry and due to the absence of switching cost
increases their bargaining power (Mills 2017). The consumers have become
more sensitive to prices so they compared different prices before making a
booking. These has decreased the consumer base and holding onto the existing

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consumer base is tough as they will choose flights providing them with a better
deal at that current time.
Bargaining
power of the
supplier
The bargaining power of the suppliers in the industry is high and there are few
numbers of suppliers in the industry. British Airways requires aircrafts, fuel
and labors from their suppliers so it is essential for them to maintain good and
long-term relationship with their customers (Belobaba, Odoni and Barnhart
2015).
Competitive
rivalry
The level of rivalry is high in both domestic and the international market.
British Airways faces intense competition in the international level which
service quality and the prices (Mills 2017). Similarly, in the domestic market
there are companies offering better deals than British Airways so they have to
remain prepared and respond immediately in order to maintain their
competitive advantage in the market.
Threat of
substitution
The threat of substitution in the market is moderate and all the pother means of
transport are the substitute products for the organization. The consumers may
prefer to use trains, buses and ships as their mode of transport and is totally
dependent on the perceived value of the product (Belobaba, Odoni and
Barnhart 2015). However, some of these consumers may not be the target
consumer of British Airways as they may be more sensitive to price than time
and convenience.
Threat of new
Entrant
The threat of new entrant in the market is quite low when compared to other
industries in the market. Airline industry requires huge investment in this field.